The inter-ministerial group (IMG) looking into the restructuring of Airports Authority of India (AAI), in its third meeting on September 4, has decided that the aircraft navigation services (ANS) comprising the air traffic controllers (ATC) needs to be separated from the AAI.
The decision comes after much deliberation over the issue. The restructuring was proposed in the civil aviation policy too, also known as vision 2020. Looking at an international trend towards privatisation of ATC services and increased private involvement in airport operations leading to many conflicts of interest, various committees set up by the civil aviation ministry had recommended that the ANS services be hived off from the AAI.
Earlier this year, AAI hired global consultancy major KPMG to look in to the issue. As per its recommendations, all the ANS should be hived off in a two-step process. As a result, ANS will become a wholly owned subsidiary of the government. The consultants also found that to bring about the change in structure and make the ANS a separate subsidiary, some legislative changes would have to be made. To avoid making such changes, KPMG suggested ANS be made a subsidiary of AAI.
The AAI has already lost two of its most profitable airports (Delhi and Mumbai) to privatisation. To lessen the financial impact on AAI, the IMG has suggested a compensation mechanism asking the new ANS entity to pay AAI 50% of its revenue surplus in the first year of separation and decreasing this by 10% every year.
During IMG discussions, one argument against the hiving off was that earlier when the ATC was part of the DGCA, there were coordination problems. Any separation of the two entities could lead to these problems resurfacing, HS Chawla, former executive director of air traffic management with AAI said at the meeting.
IMG decided that the process of hiving off should be done in a two-step process. First the complete ANS would either come under a single member of the AAI or the ANS would become a subsidiary of AAI after which the ANS would be made a separate government-owned corporate entity. The separation plan would have to take into account the career opportunities of ATC employees.